MCI WorldCom to Spend More on Local, Intl Operations (Update1)
Bloomberg News
June 2, 1999, 1:42 p.m. ET
MCI WorldCom to Spend More on Local, Intl Operations (Update1)
(Adds company comment in 5th paragraph. Updates shares.)
New York, June 2 (Bloomberg) -- MCI WorldCom Inc., the No. 2
U.S. long-distance phone company, said it expects to spend the
$1.42 billion it received from the sale of its Systemhouse
consulting unit to expand local and international operations.
The money will be used to finance an undersea fiber-optic
cable and to expand networks in Europe and Asia. In the U.S., MCI
WorldCom will expand its fiber-optic network in Atlanta,
Baltimore, Portland and Princeton, New Jersey, the company said.
MCI WorldCom's top executives, including Chief Executive
Bernard Ebbers, spoke at the company's first face-to-face
gathering with analysts since WorldCom bought MCI Communications
Corp. for $47 billion last September. Yet, some analysts were
disappointed MCI WorldCom didn't shed light on its consumer local
phone operations or how it will get into the cellular business.
MCI WorldCom said it doesn't need to provide cellular
services to its customers presently. That could change, though.
''We hope that someday we will have an opportunity be in
(cellular),'' Ebbers said at the Waldorf-Astoria hotel gathering.
''The level of that need has not risen to where we have to do
something.''
Still, long-distance rivals AT&T Corp. and Sprint Corp. have
nationwide cellular networks and are signing up customers at a
fast clip. MCI WorldCom recently decided against buying Nextel
Communications Inc., also a nationwide cellular company.
Wireless Expertise
MCI WorldCom fell 1/4 to 84 in midafternoon trading. The
company's shares have climbed more than 17 percent so far this
year, compared with a 5 percent gain in the benchmark Standard &
Poor's 500 Index.
Last week, Jackson, Mississippi-based MCI WorldCom said it
will buy SkyTel Communications Inc., the No. 2 U.S. paging
company, for $1.8 billion in stock and debt.
Ebbers said Skytel will give MCI WorldCom expertise in
building wireless networks. That could help the company in its
plans to use wireless technology to provide local phone and cable-
TV services.
In April, MCI WorldCom said it will pay as much as $482.8
million for CAI Wireless Systems Inc. MCI WorldCom wants to use
CAI's wireless-cable technology to provide high-speed data,
Internet and phone services.
Ebbers said he didn't think MCI WorldCom would buy any other
paging company. Still, MCI WorldCom does plan on using other
technologies such as cable-television and satellites to reach
more customers, he said.
The $1.42 billion in spending for local and international
operations is in addition to plans to spend $6.55 billion in 1999
on its main phone and data operations, the company said. MCI
WorldCom didn't provide 1998 capital spending.
The meeting included presentations from Ebbers, Chief
Financial Officer Scott Sullivan and Vice Chairman John Sidgmore.
Sidgmore has said buying and building networks in Asia will
be a priority for MCI WorldCom.
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